Novell’s new strategy: services

By 11.30.2001 :: 11:26AM EST11.30.2001

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beleaguered novell announced earnings, topping estimates by posting two cents profit per share while in the process of laying off 19 percent of its employees. novell plans to transform itself from being solely a provider of network operating systems to selling a complete portfolio of network software, directory services, user authentication, systems administration tools, and custom consulting. novell will utilize its newest acquisition, cambridge technology partners, to accomplish these ambitious goals.

even though it has been steadily losing market share, novell still has 17 percent of the network operating system market, sells almost one million server systems per year, and has 177 million users. novell hopes the broadening of its offerings will restore its image as a technological innovator.

with the addition of the consultants, novell will now attempt to revamp its image and find a new audience for its products. some long-time customers wonder where novell is headed, and whether it can stay afloat as a competitive software company. a strong consulting arm can bring in large fees with a high gross margin, which will offset its declining network operating system revenues.

bob's opinion
this is an end game attempt by novell to regain viability. it is a last ditch, desperate struggle. the company knows that its network software business is eroding at an accelerating pace. it knows that it cannot stop it. its business strategy is to combine its remaining assets, networking, and consulting to move into a new business area. with a similar strategy, ibm has been very successful. today, much of ibm's profits come from its consulting division.

i think that novell had better look for someone to purchase it. as its assets decline fewer and fewer clients will be willing to take the risk of entrusting their networks and businesses to novell's operating systems and consultants. the installed base and continued sales would give the right partner a valuable revenue stream and customer base.

user comments 17 comment(s)

novell finished?(12:04pm est fri nov 30 2001) wow! seems like only yesterday that novell had 65% of the market. i think this is a warning to any company. lose your innovation and lose your business. i mean, literally it has taken novell like 3-5years to come from the top spot to the bottom (or close to it). lets hope this new business model will save them, it eould be a shame to lose such a great nos. – by kevin j. lang

so what's new?(12:12pm est fri nov 30 2001)the cambridge acquisition is relatively new but, is several months old. but that's the closest thing to new here.

novell's strategy, as stated here, is an old one for novell. they have claimed this strategy several times in the past few years. first, with net services, where they said that they were going after services rather than just selling os software. and, more recently, increased concentration on consulting. but, novell consulting has been around for years.

i'd hate to see novell go. they make great products but, the “new strategy” looks the same to me.

btw, did novell mention that they are now shipping netware 6.0? supposedly, netware 6.0 is so geat it will knock your socks off.

– by get a grip

novell died a long time ago(12:22pm est fri nov 30 2001)speaking as someone who cut his teeth on netware 2.x and got his cne before his bachelor's, i am saddened to see the once-omnipotent novell reduced to the farce it currently is. however, they have no one to blame but themselves.

netware 4 was introduced around 1990, and other that bugfixes and baubles, novell didn't do squat to improve it or update for nearly a decade. the “repositioning” of their product as “intranetware” was pure marketing fluff designed to cash in on the then-popular intranet trend. anybody seen intranets as a banner product lately?

netware 5 was too little, too late. microsoft stole their thunder long ago when nt 4.0 came out. novell made an awesome file and print server, but people seemed to want a product that could do app serving as well. novell should've been at the forefront of directory development and implementation, they should've been at the forefront of webservers (which are, after all, glorified file servers), they should've ditched ipx long before they did.

all of these things were told to novell many years ago by their customers, and novell heeded none of it. i think somebody at the top became complacent and figured microsoft could never topple them. what they misunderstood, and what apple continues to misunderstand, is that the masses do not care about technological elegance or superb engineering. the masses want something that is fast, affordable, cheap, and gets the job done reasonably well. microsoft pitched their products directly at this mass appeal, and as a result mediocre engineering has become top dog.

the only way to topple microsoft from their lofty position is to fight them the same way they fought novell, ibm, and apple. unfortunately, the techie community (linux and mac combined) seems obsessed with touting the technological superiority of their products to an audience that could care less — accountants and managers. – by u.s. marine

bob from accounttemps(12:28pm est fri nov 30 2001)us marine is right, ms knows how to get money in their pockets, by talking to the bobs of the world and the ceo's who know nothing of technology, but are easily swayed by marketing gimmicks and “me too” philosophies.

it's a sad but true fact that often in life, the winners are those that can lie and cheat better than the next guy.

in its heyday novell could have bought ms. i bet they're wishing now they did. heh, then the anti-trust lawsuits would be directed at someplace else.– by x-geek

i like it…(1:01pm est fri nov 30 2001)i hope all the best for novell. i'm really not a big fan of any of their products or services. but i do like that they still have a small chunk of the market. i think more diversity and less compatability is actually a good thing in computers.and since novell does things much differently with networks than microsoft and a good many other companies, i see this as good thing for that diversity. i don't expect them to take the market back over night, but i would expect them to earn a stronger foothold.

– by heartgabriel

is this news or microsoft propoganda?(3:43pm est fri nov 30 2001)novell is not innovative??? i guess if you sit around waiting for novell to tell you, you'd know nothing of their products… i think that's pretty well evidenced by what i'm reading here.

oh well, i suppose what i read once is true: argueing with people in internet forums is like competing in the special olympics even if you win, you're still a retard. – by bah! :p

ibm vs. novell(4:26pm est fri nov 30 2001)the reason ibm could leverage “services” as a product is because they are fundamentally a hardware company. as long as their hardware can run whatever os you want to install on it, they can offer services to you. if you want to run nt, they hire an mcse to install and maintain your network. if you want to run linux, they hire an rhce. adapting to the sevices market is easy for them since to them “services” is essentially people. also, the “services” business drives their core business: if you are going to get support from ibm, why not buy ibm hardware and allow them to provide total service for hardware and software? especially in a time when one server is pretty much the same as the next. if you get someone to buy the services product, it's pretty simple to get them to buy the hardware product. and even if they don't, you can still make money from the services.

novell is in the exact opposite position. they are a software company that is trying to move product by offering services for their product. they are not in an agnostic position like ibm. they're in a position where they are trying to sell services, but in order to sell services, they have to sell their products first. you can't do much netware support in an nt shop. this is a much harder sell. not only do you have to convince the customer to switch service providers, but switch their platform as well. i don't see this as being a solution for novell. this is pretty much the death stroke. and i don't think microsoft is going to come along and dump $150 million to bail them out (like apple).– by my $0.02

markets(6:48pm est fri nov 30 2001)novell has a strong market presence amoung system administrators. corp managers went with nt dispite the sysops advice. it's not the training because cne was 1st. it's web servers with nt 4.0 and backoffice for under 1k hardware and software. but 10 cheap web servers to 3 compaq/ibm enterprise level servers costing 10k is not a bad market share. its not inovation, if you know the novell products, and don't bash ipx when 10 years ago you had to run 1000+ workstations, ipx and novell 32 bit client were as stable as anything you could get outside of the mini/main market. its not novells lack of marketing products because they have more seminars than ms 2 to 1. this is just ms's lie 1st marketing policy that people new to it take as gospel. – by tech

drive…(11:59am est sat dec 01 2001)here's a question:

suppose novell and microsoft built cars in the same way they build their software.

which car would you put yourself and your family in and drive from coast-to-coast?

think about the fuel consumption, repair bills, time to get there, what would happen if you were in an accident and so on.

would you put your family in a microsoft car?

you would if you were the manson family, i suppose!– by floyd

novell???(12:00am est sun dec 02 2001)what is novell? – by wer

dammnit wer…(12:20am est sun dec 02 2001)ahh what's the use.

i like the car anology. i would put my worst enemy in the ms car, then drive past his gruesome crash site in my novell. it's toyota vs. dodge. and don't even ask which is which.

– by camry bastard

lack of vision!(5:47pm est sun dec 02 2001)if only novelle would focus on set-and-forget modular server appliances. the ipx protocol is good for protocol switching. why not create novelle protocol switching firewall or a novelle file server. for crying out loud, the novelle ceo have got to learn to diversify its product line. i wonder why sony is still in business, despite the betamax fiasco. – by ceos are idiots!

microsoft car(7:13pm est sun dec 02 2001)i would definitely buy the microsoft car and i know for a fact that i would leave everyone in the dust. software is just a tool, how you use it is what makes the difference. so to go back to the car analagy it's 90% user (administrator/engineer/developer) and 10% software. in the car world it's 90% driver and 10% car. that's why there isn't a production mustang that can touch me in my honda. – by endo

your life in your hands…(4:36am est mon dec 03 2001)you would leave everyone in the dust – the great big pile of it that would be left as various bits fell off your microsoft car.

i notice you avoid mentioning whether you'd put your children in a microsoft car, tho'.– by floyd

netware admin kicks nt admin's butt(1:11pm est mon dec 03 2001)i have taken network administrator courses for both novell and nt. i administer our shop which is novell. and nds is just so much more granular and superior to nt – it's nothing to be compared.

the people who have driven ms to domination (nt server, 2000) are the damned head honchos of organizations and newbie 'admins' who don't know what dir + does in a dos prompt.

these losers get the go-ahead to install ms servers that max out with 200 users, while the novell boxes only need to be upgraded when several thousand users are connected.

spread the word – most geeks know that novell is superior. as other posters above said…ms lies is what has moved them up. – by maddog.

marketing weasels(8:06am est tue dec 04 2001)microsoft has “won” because of flashier marketing, not because it's a better product. netware is rock-solid.

it's too bad we're such lemmings that we will choose something just because it's flashier or is dumbed-down. – by xp-eed